H-B visas being used to outsource cheap labour rather than talent

Updated on: Wednesday, April 24, 2013

Amidst Congressional debate on the comprehensive immigration reform, a top US Senator has accused big Indian IT companies - TCS, Infosys and Wipro - of abusing the H-1B visa system.

"There are some specific abuses of H-1B," Senator Richard Durbin, said during a Congressional hearing on immigration reform by the powerful Senate Judiciary Committee on Monday, during which the lawmakers discussed threadbare the H-1B visa issues.

In fact, Senator Durbin went on to brand the top Indian IT companies as outsourcing firms.

"These outsourcing firms like Infosys, Wipro, Tata and others Americans would be shocked to know that the H-1B visas are not going to Microsoft; they're going to these firms, largely in India, who are finding workers, engineers, who will work at low wages in the US for three years and pay a fee to Infosys or these companies," Durbin alleged.

"I think that is an abuse of what we're trying to achieve here. Most people would think, well, Microsoft needs these folks, and they'd be shocked to know that most of the H-1B visas are not going to companies like yours; they're going to these outsourcing companies," Durbin alleged.

He said this during the hearing in which two Indian Americans testified before the committee and supported the allegations of the Senator against Indian IT firms.

Brad Smith, general counsel and executive vice president, legal and corporate affairs, Microsoft, too supported the Senator on the issue.

"I personally think it's important that we both recognise the need for these firms to evolve their business model I've had these conversations myself with them in India that encourages them to focus on hiring more people in the US," he told lawmakers in response to a question.

The proposed comprehensive immigration bill if passed by the Congress and signed into law by the US President would bar companies from hiring people on H-1B visa if 50 per cent of their employees are not Americans.

The US India Business Council and Confederation of Indian Industry have opposed such a move and said that this is against the spirit of India US strategic relationship.

The issue was also raised by the Union Finance Minister, P Chidambaram, when he met the Treasury Secretary, Jack Lew, in Washington last week on the sidelines of the annual Spring meeting of the International Monetary Fund and the World Bank.

Chidambaram told Lew that "temporary relocation of knowledge workers should not be confused with immigration."

Testifying before the Senate Judiciary Committee, Smith told lawmakers that he had told the Indian companies three years ago to change their business model which was heavily dependent on H-1B visas.

"I told them that three years ago. They better recognise that there's no large country in the world that allows people to employ over half of their people from outside the local population. So I do support that," he said.

"I do think it's important that one not eliminate their ability to do good work, because they also do good work. I don't want to lose sight of that," he added.

Neeraj Gupta, CEO and cofounder of Systems in Motion, who once was on the H-1B system, said the number one users of H1B and L1B visas are the offshoring industry.

"Also, the number one reason why enterprises use off showing programmes is for cost reduction. Isn't there a direct correlation? How could one miss the linkage that the visas are primarily being used for lower costs? It did not matter who the beneficiary of these visas is.

"It could be a large offshore company with headquarters in India or the US or a global major like IBM or Accenture," he said.

Gupta said the US market is the largest revenue source for offshore vendors.

"H1B visas allowed them to create easy mobility and keep utilisation rates high. The first question an Indian business would ask was why do we need to hire an American worker when we can get a cheaper resource in India, benched in India at a lower wage and mobilised on an as-needed basis," he alleged.

"The offshore majors mostly hired H1B employees because the current policy provided them a subsidy," he said, adding that there's a lot of resources available that one can hire and train here in the US.

"The majority of the work done by H1B employers is really not specialist work. Most of them have between three to eight years of experience and they go on to do work for large IT departments for US banks, insurance companies, telecom operators.

"This is not the kind for which we need more H1B visas such as what Google and Microsoft might need and is not traditionally considered specialised work," he said.

Ron Hira, Associate Professor of Public Policy, Rochester Institute of Technology, alleged that right now the majority of the H-1B programme is being used to hire cheap indentured workers.

"The bulk of demand for H1B visas is being driven by the desire for lower cost workers, not a race for specialised talent or a shortage of American talent. The results show this. All of the top 10 H1B employers last year used the programme principally to outsource American jobs to overseas locations.

"Outsourcing firms have received the majority of H1B visas issued last year. Globalisation and outsourcing will happen, but we shouldn't be subsidising and promoting it through flawed guest worker policies," Hira said.

Noting that many claim that the H1B guest worker programme is primarily used as a bridge to permanent immigration, Hira said top H1B employers have no intention of ever applying for green cards for their workers.

Accenture, for example, received a remarkable 4,000 H1Bs last year alone, but it only applied for eight green cards.

"Outsourcing is only the most visible and obvious symptom of the underlying problems. Programme misuse is widespread even beyond the outsourcing terms.

"This is due to two fundamental problems: First, H1B workers are cheaper than American workers, and second, American workers do not have a first and legitimate shot at jobs and, in fact, can even be replaced by H1B workers. Simply put, there's no shortage necessary before hiring an H1B worker," Hira said.

H-B visas being used to outsource cheap labour rather than talent

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